BMRI NPLs Fell to 1.88%. Restructured Covid Loans Are Still 11% of the Book.

Why Profit Grew Nearly 3x Faster Than Revenue

Bank Mandiri is Indonesia's largest bank by assets - a majority state-owned lender (the Government of Indonesia holds 52%, with the sovereign wealth fund Indonesia Investment Authority holding another 8%) built on scale across corporate, commercial, and retail banking rather than any single cheap-funding niche. This is Mandiri's FY2022 annual report (period ended December 31, 2022, audited financial statements filed January 31, 2023) - the first year Indonesia's economy ran mostly unrestricted after two years of pandemic-era credit stress, and the year the country's central bank began raising rates again after the earlier easing cycle.

The headline number is a 46.9% jump in net income to Rp41.2 trillion. But look at what's actually driving it: net interest and premium income - the bank's real "Net Revenue equivalent" - grew a solid but far more modest 20.7% YoY. Profit grew more than twice as fast as revenue. The gap is almost entirely a shrinking credit-cost line: BOPO^» (the Indonesian regulator's opex-to-operating-income ratio) fell from 67.26% to 57.35%, and loan-loss reserves against total earning assets fell from 5.04% to 3.91% of the book. That's a bank releasing provisions it built up during the pandemic, not a bank whose underlying lending business suddenly got dramatically bigger. Both are real - Mandiri's own reported gross NPL ratio fell from 2.81% to 1.88% over the year - but a reader comparing this quarter's profit growth to its revenue growth needs to know which one is doing the heavier lifting.

The Prescription

Mandiri's real edge is balance-sheet scale funding a corporate and commercial book most Indonesian banks can't touch - the operational move that compounds that edge is pushing further into transaction banking and cash management for the large corporates and state-linked entities it already banks, the same playbook that turns a lending relationship into a low-cost-funding relationship (the CASA^» ratio here, at 73.4%, still trails BBCA's, and closing that gap is worth more to long-run margins than chasing loan growth for its own sake). Cheap, sticky transaction deposits from the corporates Mandiri already lends to are a bigger lever than the loan book's headline growth rate.

What it should stop doing: treating a shrinking headline NPL ratio as the full asset-quality story without the restructured-loan number sitting right next to it. Gross NPLs falling from 2.81% to 1.88% is a genuinely good year - but Rp102.1 trillion of the bank's own loan book, still 10.9% of it, is Covid-era restructured credit (see Beyond the Usual below), and reporting the clean ratio without that context flatters the underlying picture more than the numbers actually support.

Key Financial Metrics

FY2022 vs FY2021 (P&L), and Dec 2022 vs Dec 2021 (balance sheet) - consolidated

FX: IDR 15,567.50 = USD 1 (December 31, 2022; IDR 14,252.50 = USD 1 on December 31, 2021), both per the report's own year-end reference rate disclosure.

Metric	FY2022 (IDR)	FY2022 (USD)	FY2021 (IDR)	YoY
Net interest, syariah & premium income, net ("Net Revenue" equivalent)	Rp90,371,052M	~$5.81B	Rp74,850,427M	✅ +20.7%
Non-interest operating expense, net	Rp34,202,963M	~$2.20B	Rp36,410,224M	✅ -6.1%
Operating Income	Rp56,168,089M	~$3.61B	Rp38,440,203M	✅ +46.1%
Net Income (attributable to owners)	Rp41,170,637M	~$2.64B	Rp28,028,155M	✅ +46.9%
EPS	Rp882.52	~$0.057	Rp601.06	✅ +46.8%

Balance sheet metric	Dec 2022 (IDR)	Dec 2022 (USD)	Dec 2021 (IDR)	YoY
Total Assets	Rp1,992,544,687M	~$128.0B	Rp1,725,611,128M	✅ +15.5%
Loans (Kredit)	Rp1,172,599,882M	~$75.3B	Rp1,026,224,827M	✅ +14.3%
Total Deposits (Giro + Tabungan + Deposito)	Rp1,490,844,592M	~$95.8B	Rp1,291,176,119M	✅ +15.5%
Total Liabilities	Rp1,762,865,901M	~$113.2B	Rp1,520,924,516M	➖ +15.9%
Total Equity (attributable to owners)	Rp229,678,786M	~$14.8B	Rp204,686,612M	✅ +12.2%

Operating cash flow this quarter was Rp100.7 trillion (~$6.47B), against Rp5.1 trillion (~$0.33B) of fixed- and intangible-asset purchases, and total cash was Rp274.9 trillion (~$17.7B, per the consolidated cash flow statement's year-end cash-and-equivalents balance) - both are available this quarter, unlike in BCA's earliest backfilled quarters.

A bank whose profit grows twice as fast as its revenue is either getting genuinely more efficient, or just releasing provisions it built for a crisis that's now over - Mandiri's numbers this year are mostly the second one.

Key Operational Metrics

• CASA^» ratio: 73.4% (Giro Rp541,801,050M + Tabungan Rp552,752,472M, against total deposits of Rp1,490,844,592M) - solid for a corporate-heavy bank, though still well below BBCA's ~77% (see BCA's Q1 2016 post), a gap that reflects BBCA's transaction-banking franchise more than anything wrong with Mandiri's funding.
• Loan-to-deposit ratio (LDR^»): 77.61%, per the bank's own filed ratio table - down from 80.04% a year earlier, meaning deposits grew faster than loans over the year.
• NIM^»: 5.16%, up from 4.73% - margin expansion alongside the rate-hiking cycle that began in 2022.
• NPL^» ratio - gross: 1.88%, down from 2.81% a year earlier.
• NPL ratio - net: 0.26%, down from 0.41%.
• CAR^» (capital adequacy): 19.60% consolidated (19.46% individual/bank-only), essentially flat from 19.56%/19.65% a year earlier - comfortably above the regulatory minimum.
• ROA: 3.30%, up from 2.53%.
• ROE: 22.62%, up from 16.24% - this is the bank's own regulatory-formula ratio (pre-tax income over average equity, the Indonesian OJK convention), which runs meaningfully higher than a simple net-income-over-average-equity calculation would produce (roughly 19% on that basis) - worth knowing before comparing this figure directly to a ROE quoted elsewhere on a different formula.
• BOPO^»: 57.35%, down sharply from 67.26% - a big efficiency improvement, though see the opening section above for how much of this is provisioning relief rather than genuine cost control.
• Not available in this filing: a segment-level breakdown of loans or profitability (Mandiri reports as a single consolidated banking entity, not multiple disclosed business segments), and a maturity-bucketed breakdown of the securities portfolio.

Beyond the Usual

Restructured Covid-era loans are still 11% of the bank-only loan book

The bank's own asset-quality schedule shows Rp102.1 trillion of loans still classified as restructured (explicitly including "debitur terdampak Covid-19" - borrowers affected by Covid-19), against a bank-only (unconsolidated) loan book of Rp932.6 trillion - 10.9% of it. That's down meaningfully from 16.7% a year earlier (Rp137.9 trillion against Rp828.1 trillion), a real improvement, but it means the clean 1.88% gross NPL ratio headlined above sits next to a restructured book roughly six times larger that hasn't yet been tested by full commercial terms. Whether that 10.9% eventually re-defaults, stays performing, or keeps shrinking is the real asset-quality question for next year, not the NPL ratio alone.

Government and sovereign-fund ownership puts 60% of the bank under state control

The Government of Indonesia directly holds 52% of Mandiri, and Indonesia Investment Authority - the country's sovereign wealth fund - holds another 8%, meaning 60% of the bank sits under state or state-linked control with no other single shareholder disclosed above the 5% reporting threshold. This is a known, structural feature of Mandiri as a BUMN (state-owned enterprise) rather than a new development this quarter, but it's the standing governance context a reader comparing Mandiri to a privately-controlled peer like BCA should keep in view - state ownership brings both an implicit sovereign backstop and the standing risk of directed lending toward government priorities rather than pure credit-return decisions.

Related-party lending is a rounding error on the loan book

Mandiri's own asset-quality schedule discloses loans to related parties (affiliated entities, not counting the government as a whole) at just Rp3.9 trillion, or 0.42% of the bank-only loan book - and virtually all of it (Rp3.94 trillion out of Rp3.94 trillion) is current, with almost nothing in a worse quality bucket. For a state-owned bank whose ownership structure could plausibly create related-party lending pressure, this is a genuinely small, clean number.

No Additional Tier 1 instruments in the capital stack

Mandiri's regulatory capital is built entirely from CET1^» (Rp223.3 trillion consolidated) and Tier 2 (Rp13.2 trillion) - the Additional Tier 1 (AT1) line in the bank's own capital-adequacy schedule is zero on both an individual and consolidated basis. That's a simpler, more equity-funded capital structure than banks that lean on perpetual subordinated AT1 instruments to boost their capital ratio without issuing new shares.

Currency translation, not just operating cash flow, drove this year's cash build

Cash and equivalents grew Rp71.4 trillion over the year, but Rp9.8 trillion of that increase (about 14% of it) came from the "impact of foreign exchange rate changes" line in the cash flow statement, not operating, investing, or financing activity - a mechanical effect of the Rupiah's roughly 9.2% depreciation against the US Dollar over 2022 (from Rp14,252.50 to Rp15,567.50 per the report's own year-end reference rates) revaluing Mandiri's foreign-currency cash balances higher in Rupiah terms. Worth separating out before crediting the full cash increase to the year's operating performance.

Off-balance-sheet commitments and contingencies add up to roughly a fifth of total assets

Between undrawn credit facilities (Rp197.5 trillion, committed and uncommitted combined), outstanding irrevocable letters of credit (Rp28.3 trillion), and guarantees given (Rp122.8 trillion), Mandiri's disclosed commitments and contingent liabilities total roughly Rp348.7 trillion - about 17.5% of the bank's total consolidated assets. None of this sits on the balance sheet as debt, and it's standard disclosure for a bank this size, but it's the real scale of exposure a reader wouldn't see just from the balance sheet's liability side.

Target Valuation Range

Market cap Rp463.2 trillion (~$29.8B), ~2.0x P/B, ~11.2x P/E. Bottom line: Mandiri looks reasonably, even attractively, valued against its own profitability - ~11.2x trailing P/E and ~2.0x P/B for a bank posting a 22.6% regulatory ROE is a real discount to what a bank this profitable would command if the market fully trusted the earnings quality and the state-ownership structure behind it.

Bank Mandiri's shares closed at approximately Rp9,925 on December 30, 2022, the last trading day of the year (public market price on the Indonesia Stock Exchange; converted from the split-adjusted price data pulled today to account for the company's later 1:2 stock split in April 2023, since price data pulled today for this period reflects that split retroactively). Against this year's own numbers, using 46,666,666,666 shares outstanding:

Market cap → book value	Q4 2022
Share price (period-end)	Rp9,925
Shares outstanding	46,666,666,666
Market capitalization	Rp463.2 trillion (~$29.8B)
Total equity (book value)	Rp229,678,786M
Book value per share	Rp4,922

Peer-multiple sanity check	n/a	Q4 2022	Change
P/B	n/a	2.0x	-
P/E	n/a	11.2x	-

P/E: ~11.2x, using FY2022 EPS of Rp882.52 - a genuine trailing full-year figure, not an annualized single-quarter estimate. P/B: ~2.0x, using book value per share of ~Rp4,922 (Rp229,678,786M total equity attributable to owners ÷ 46,666,666,666 shares). Market capitalization: approximately Rp463.2 trillion (~$29.8B). Both multiples sit well below what BBCA has historically commanded on a similar ROE profile (BBCA traded around ~18x P/E and ~3.3x P/B in its own earliest backfilled quarters - see BCA's Q1 2016 post - though that comparison spans different years and macro conditions, so it's directional context, not a same-period read). The gap is plausibly the state-ownership and directed-lending risk premium the market prices into Mandiri versus a privately-controlled peer, plus Mandiri's larger, more commodity-cycle-exposed corporate book. A full DCF isn't included here - one year's numbers aren't enough to responsibly model a multi-year loan growth, margin, and cost-of-equity trajectory for a bank this size, and a fabricated-precision DCF from a single annual filing is worse than no DCF. The peer-multiple read above is the honest valuation lens for this backfill's starting point.

Share price moved a strong +51.0% from Rp3,287.5 (Jan 2021, split-adjusted) to Rp4,962.5 (Dec 2022, split-adjusted) over the trailing two years, with an even larger +85% run from the Rp2,850 trough (Jul 2021) to the Rp5,275 peak (Oct 2022) before easing back into year-end - a genuinely large move that reflects the same profit recovery and provisioning-release story covered above, not something that needs a separate explanation beyond it.

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